Revolving line of credit for coffee cooperatives

Small-scale coffee farmers in Chiapas, Mexico have struggled to make a living income from their coffee. To address this, Heifer International supported 2,654 families across 74 communities in Chiapas through the Promesa Café program to improve coffee production and food security.

During the project, Heifer International partnered with Root Capital, a nonprofit social investment fund, to provide technical assistance to coffee cooperative staff on financial education, strengthening administrative processes and internal control systems for organic production.

Photo: Heifer International

Heifer Impact Capital and Root Capital extended a revolving line of credit to four cooperatives, enabling them to purchase coffee from farmers to meet bigger orders and provide farmers with access to finance at lower rates. As a result, the cooperatives offered farmers higher prices for bulk quantities of Robusta coffee that they sell to CAFINCO, a dedicated buyer, increasing farmers’ incomes.

The four coffee cooperatives benefited from a $60,057 investment, enabling 63 families to earn better prices for their products. Farmers sold three batches of coffee to the cooperatives for $97,847. The cooperatives quickly repaid the first two loans before purchasing and selling the third batch to CAFINCO.

After repaying the revolving credits, which had a 7% interest rate, the cooperatives generated $12,662 in profit. They used 2% of the interest captured to establish savings funds. The remaining 5% was added to the initial investment fund to be reinvested.

This article was originally published by Heifer International.